Title: Unregulated corporate financial statements and analysts' target price accuracy: evidence from embedded value reporting by life insurers

Authors: Samir M. El-Gazzar; Rudolph A. Jacob; Scott P. McGregor

Addresses: Pace University, New York, NY, USA ' Pace University, New York, NY, USA ' Fairleigh Dickinson University, Madison, NJ, USA

Abstract: Multiple studies support the value relevance of embedded value (EV) disclosures by life insurance companies. To the best of our knowledge, this is the first paper to examine the impact of EV voluntary disclosure on analysts' target price forecast accuracy. Our findings support the proposition that EV is a valuable supplemental information in and should be of special interest to financial reporting policy makers, financial analysts, managers, and academics. Our analysis suggests that life insurers that currently do not disclose EV should consider disclosing the measure, and financial analysts in the US should encourage US life insurers to disclose EV to support their valuation of life insurers' stocks. We contribute to the extant literature on embedded value, and voluntary disclosures, by providing evidence that suggests that EV disclosure helps improve the accuracy of analyst forecasts.

Keywords: embedded value; EV; voluntary disclosure; insurance accounting; target price accuracy.

DOI: 10.1504/IJAF.2021.120603

International Journal of Accounting and Finance, 2021 Vol.11 No.1, pp.18 - 39

Accepted: 08 Sep 2021
Published online: 27 Jan 2022 *

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